Government Contracts Cancellation of RFP Based on High Pricing Reasonable
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Thursday, November 14, 2019

Cancellation of RFP Based on High Pricing Reasonable

By Government Contracts Editorial Staff

The cancellation of a request for proposals for a maritime support vessel charter was reasonable because the proposed prices were substantially higher than available funding. Before issuing the RFP, the government conducted market surveys and developed an independent government estimate and a budget of approximately $223 million for all performance periods. It then certified available Fiscal Year 2019 funds of $120 million. After receiving two offers, the government determined the proposed prices “far exceed[ed] the available budget authority” for any fiscal year. The government then engaged in preliminary discussions, but the revised prices still greatly exceeded the available FY 2019 funds and total budget, so the government withdrew the funding for the procurement. In addition, around the same time, the Assistant Secretary of the Navy for Research Development and Acquisition issued a memorandum making a country-of-origin requirement applicable to MSV ships. The contracting officer then cancelled the procurement, finding the memorandum’s restriction substantially changed the RFP requirement.

Additional Funds Unavailable. The Comptroller General denied the protest, finding no basis to object to the cancellation of the RFP. The record showed that both proposals substantially exceeded available funding, and the government submitted documentation showing that additional funds were not available. The record also showed the government made efforts to provide offerors with alternative delivery and payment scenarios, in an unsuccessful attempt to reduce pricing to an amount that would permit contract award. Although the government did not contemporaneously cite lack of funding as the reason for the cancellation, “a new or additional rationale justifying the cancellation of a solicitation provided … during the development of a protest is acceptable so long as it would have supported cancellation had it been advanced originally.” Finally, the protester’s assertion that existing budget constraints could have been resolved also lacked merit. A protester’s belief that negotiations might have resulted in reduced pricing does not make a cancellation decision unreasonable, and here, there was still a significant difference between the offerors’ reduced pricing and the available funding, which made it unlikely that negotiations, without a significant reduction in the scope of the contract requirements, would have proved successful. (U.S. Marine Management, Inc., 34 CGEN ¶116,558)

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